hi, everybody. welcome to "the wall street journal report." i'm maria bartiromo. an icon of american capitalism for sale. a foreign company acquiring the new york stock exchange? what it means and why it's happening. my discussion with a rising star in the democratic party. the leader of a troubled city, new york mayor cory booker talks about comebacks, crime, and his facebook connection. and he is a chef, a brand, and a businessman. mr. chocolate, jacques torres joins me with some valentine's day treats and the taste of success. "the wall street journal report" begins right now. >> this is america's number one financial news program, "the wall street journal report." now maria bartiromo. >> here is a look at what is making news as we head into a

new week on wall street. the very symbol of american capitalism is for sale, and it's likely to be acquired by a german company. the new york stock exchange is in advanced talks to be acquired by the deutsch borsa, the german new york stock exchange. it would be more than 60% owned by the foreign company, but the deal is still facing political and regulatory hurdles. the new york stock exchange began more than two centuries ago against a buttonwood tree in lower manhattan. the dow jones industrial average snapped an eight-day winning streak on thursday after setting two and a half year highs during the week. then rebounded on friday. at hearings on capitol hill, federal reserve chairman ben bernanke faced harsh questions from the budget house budget committee. mr. bernanke said inflation is not a problem right now and quantitative easing created 600,000 jobs. he also said he was encouraged by the recent decline in unemployment. some big consumer stocks made earnings news this week. disney beat analysts'

expectations as did cisco. but the computer networking company disappointed on weaker margins and stock sold off. coke and kraft met expectations. two well-known media companies are combining forces. aol is buying the huffington post for $315 million. huff po co-founder arianna huffington will control aol's editorial content. aol just recently unwound itself from its ill-fated purchase of time warner more than ten years ago. there are several developing stories that we're watching this weekend. the changing situation in egypt, of course and the u.s. government's plan to reduce its own role in the housing market. joining me with more is david wessel, economic editor of and david kelly. gentlemen, nice to have you on the program. welcome. >> glad to be here. >> thank you. >> let's start with the still developing story in egypt. david kelly, the market seemed to be shrugging off what is happening in egypt, and the global uncertainty. what do you think the impact of

the egyptian developments have on investing? >> i think what has happened is egypt has occurred at a time when the fundamentals for the u.s. stock market were really improving very dramatically. all signs are the economy strengthening here. we're also seeing lot of individual investors finally moving bonds out of equity funds. so i think strong tied, i think the markets have been able to deal with a certain amount of uncertainty coming out of egypt. >> the military clearly in control at this point in egypt do. you want to be avoiding some of the emerging markets or the middle east, egypt in -- as a result of what has again on, do you think? >> obviously you should be a little bittner vows about egypt. but wrart to emerging markets in general we have a boom going on. it's verging on a bubble in some areas. i think investors need to be careful here. the real issue is actually not egypt. it's about inflation and commodity prices and interests recuperates. we see some emerging markets

such as india where inflation is pretty high. the central bank is behind the curve. so i think there could be some problems there with valuation. i think investors should be more broadly diversified, not because of egypt. but i think when they put money to work in the international level, they need to look at international developed countries, not just emerging markets. and we're seeing too much money just going to emerging markets. >> meanwhile, david wessel, the treasury unveiling its white paper, reforming fannie mae and freddie mac. this is a long time coming. the plan appears long on ambition but short on details. what is your take on it? >> i think you're absolutely right, maria. if egypt is a story that is change big hour by hour, the fannie mae/freddie mac seems to take eons to change. basically this is somewhere about the second or third inning in this thing. for both economic reaso. they don't want to mess up the housing market when it's farajling, and political reasons, they don't want to give an easy target. they put out this 22-page paper

that even has three options. no government, some government, and more government in it. and it's really just a beginning of a dialogue. but it does send a very clear signal that the administration is trying to reduce the role of these government-owned giants, fannie mae and freddie mac in the housing market. >> in terms of the market reaction, we haven't really seen much, and do you think it's because people are really not sure what this means, and how this will actually impact the housing market? >> yes. i think basically the markets are saying, wisely, wake me up when you figure out what you guys are going to do. there will be a few near-term changes, though. for instance, in its proposal, the administration says the limit on the loans that fannie mae and freddie mac guarantee should go from about $750,000 to something like $650,000 on october 1st. so that would be one of the first tangible things. but most of this is a real wait and see game. >> david kelly, the dow meanwhile had an eight-day winning streak. it snapped of course, that winning streak this week.

but the markets are looking pretty strong these days. earnings season was good. the economy seems to be in better shape. where do you think the market goss from here? are the markets ahead of the actual fundamentals? >> no, they're not. and that's really an amazing thing to say after an almost 100% upmove in the stock market. the stock market is still looking cheap relative to the fundamentals. we're looking at a ratio of about 13 to 14 times based on where we think earnings are going to go over the next year or two. that's still quite a cheap market. this a time when investors need to keep their nerve. overweight stocks and underweight bonds. i think that's the way people should play it. we're starting to see investment money move that way. because we were so far down this bull still has a good room to run here. >> and then of course we have the big headline this week. the new york stock exchange is for sale. likely to be acquired by germany's stock exchange, the

deutsch borsa. >> it's more a symptom of the way statements are changing. they're much more global, much more automated. the margins are smaller. they're consolidating. and it's surprising to me that this has kind of been shrugged off as no big deal. it's is a big deal, but only to the people who trade stocks. i think for the investors it means very little. maybe it means that transaction also get cheaper over time. >> a lot of consolidation across financial service. david kelly, you give us investable ideas? what sectors do you like here? >> within the stock market we still like technology, consumer discretionary. we think the economy is growing faster than the markets are priced in. this economy looks like it's growing at more than a 4%s recuperate over the next year. with just the very short duration high yield and munies also look good. >> munies? >> i know. people have really sold off munies. but munies look good to us we

think on a value basis, a valuation basis. but with international more in developed countries, less in emerging markets. and we think there is still plenty of opportunity out there. >> gentlemen, great conversation. we appreciate your time today. thank you so much. >> you're welcome. >> we'll see you soon. david wessel and david kelly. the mayor of one troubled american city on rebuilding an urban budget and infrastructure brick by brick. newark, new jersey's cory booker is with us. just in time for valentine's day, the price of love. the famous chocolate entrepreneur on cocoa, sugar and sweets for your sweet. as we take a break, we'll take a look at how the stock market ended the week. each day was fueled by thorough preparation for events to come. well somewhere along the way, emily went right on living. but you see, with the help of her raymond james financial advisor,

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hoping for a rebuild, the loss of the industrial jobs it

once boasted have meant tough times for newark, new jersey. newark's mayor of nearly five years is facing these economic challenges head-on, and he'll even shovel your sidewalk after a winter storm. mary cory booker is on the program. >> it's great to finally get together with you. >> yes. newark received considerable national attention when facebook ceo mark zuckerberg promised $100 million to newark's public schools. when will we see that money, and tell me how you envision using that money? >> the interesting thing about american education is we spend a lot of money, a lot of money in our nation, rather, and we don't get great results for it. so money isn't necessarily the solution. i say it's a necessary but not sufficient part of the equation. but the reality is we're trying to use this money in a very strategic way, to launch large-scale reforms that have not taken hold in our city yet. so we're being very thoughtful about one-time infusions of capital. if you just use them for operating expenses, it's not going to solve your problem. but how do you figure out ways

to create real reform. so we're looking at everything about changing the way we have a compact sort of with our teachers, our most valuable players out there. we have to find better ways of supporting them, but also holding them accountable. we're looking at ways of starting new models for schools, and giving seed money to do that. and we're looking at innovations in technology that have proven to work in other places to see if they can take hold as well in the city of newark. >> broadly speaking, how are things going in newark? we continue to hear stories of, you know, deficits throughout the country, the possibility of default in certain states. bankruptcies. give us the lay of the land in newark. >> well, it's interesting. we are the belly of the worst economy of my lifetime. and a as many cities around our state and around the nation were suffering as a result, but if you look at newark in terms of sort of competitive advantage of cities, we're really flexing our muscles now. we're directing companies like you wouldn't believe. the first time we're really spiking upwards. you have rumors and negotiations

going now with everybody from panasonic moving their national headquarters potentially to city of newark, which we're hoping is something that can happen, and a lot of other things are showing that we're a sign of strength. our university sector, research is growing a lot. so there are so many things that are positive about a city that is ten miles from new york city that are good. but the reality is we have to confront what is happening in governments from the city level, county level, state level, all over our nation, which is they're running a very dangerous race towards the edge of a cliff. and unless we change our financial practices and address these incredible mushrooming liabilities, pension liabilities, health care liabilities, government as we know it is going to fall off a cliff. now i think that kind of crisis is going to force the kind of whole scale pension reform, health care reforms that we need to dramatically lower the cost of government. but it's going to be a lot of tough choices between now and i think over the next two or three years. >> so we'll see redos of contracts, we'll see spending cuts going forward? it's going to be the word of the

day? >> well, we dramatically cut our city government, dramatically. tens and tens of millions of dollars in cuts. in personnel cuts and efficiencies that we've created. and we're still looking at it. but when you have a reality like my police department, for example, where 98% of every dollar spent in my police department is spent to cover personnel costs. >> wow. >> and we have a 68% fringe on top of our salary, which is just way out of whack compared to anything in the private sector that you might see. this is not sustainable. so we have to find larger solutions. and camden, new jersey is a great example. we have a tremendous mayor right there that is in the thick of a battle for her life because that city can't afford its police department. they have had to cut nearly half of it. but they're thinking of innovative ideas. and this is where the mayor is saying why don't we disband the city police department, create a regional policing operations where we can create an entirely new contract that is much more in line with affordability, but also creates more public safety on our streets.

so these are the kind of outside--the-box ideas that folks are going to have. but i get articles every day. fresno, you know, new york city, almost 60% of our cities right now are making major cutbacks in public safety. and we know that cities live or die on their crimes recuperates. this is why newark for three years was pushing it down. but it really to sustain that in these economic times is going to be difficult. >> and in the face of unemployment. >> absolutely. >> it continues to persist. what are you going to do to get your arms around the unemployments recuperate in newark? >> well, i have a very advantageous position as the mayor of newark because we sit on the best transportation superstructure in the northeastern seaboard, and we have not leveraged that. and we have now brought new companies to newark, pitney bowes, building warehouse and distribution. the logistics industry will tell you why are we bringing into new york's port or air freight and kicking it down many miles away to do our warehousing there? if we can do warehousing at our

port we can create a lot of jobs. we believe there is tens of thousand of jobs. we're about to announce a deal on march 1st with another company that has decided to put their distribution there that is going to create hundreds of jobs for the city of newark. we also know our research and education sector is a great area to create jobs. we sat with a french company in my office this last week that has determined to bring their facilities to newark. >> i love the fact that you keep such a high profile in the media when you treat -- >> yes. >> -- tweeting regularly about your weight loss, about appearing on various shows. what are your plans? >> look, i've got three-plus years left on this term. and it's exciting. i really feel like i'm at the center of the best city in america because of the opportunities that we have. but also i get to deal with america's problems every day. so i'm in the sweet spot. i'm in the favorite job of my life. so we'll see what happens there is a wonderful article in "the new york times" yesterday by david brooks who said -- talked about rahm emanuel moving from the federal level to the city level. but he talked about the splendor of cities.

this is where innovation happens. this is where the big ideas come from. and if we can solve the problems of american cities we can change america. as we know actually living in a global economy, we can change the world. so i feel blessed that the residents of my great city put a little faith on me to be on the front lines of that fight. >> mayor booker, it's great to have you on the show. >> my pleasure. up next, mr. chocolate is in the house with some valentines treat. a little sweet tal [ female announcer ] to get fresh-baked

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welcome back. valentine's day is upon us. will it offer the sweet smell of success to the retail and luxury industries? they say chocolate is the food of love. my next guest is one of the world's best known pastry chefs as well as the founder and ceo of the retail chain jacques torres chocolate. chef torres, it's great to you on the program. >> don't mind me. happy valentine. >> thank you. same to you. so cocoa. you've got so many great treats here, which i want to get to in a moment. but cocoa and sugar futures have been up, right? things are getting more expensive there is concern now over a disputed election in the ivory coast, the world's number one grower of cocoa beans. how do political and market developments like that impact the industry? >> the problem is that we don't know for how long we don't have exportations of cocoa from ivory coast.

they mention that maybe for one month. but if it's drag, automatically the supply of cocoa will be a little bit harder. this is the biggest country, the biggest producer in the world of cocoa. africa produces almost 70% of cocoa that we need to make the chocolate. so it's a big unknown. and of course over that. >> of course. that's one of the reasons that prices have up. so valentine's day is here. a $15 billion retail holiday. this is obviously one of the important holidays for your business, correct? >> yes. this is the holiday in numbers when we look at christmas, easter, and valentine. christmas is the first. easter the second, and valentine the third. but valentine is so short, valentine will be the biggest single day of sales of the year. so that's why all the retailer, everybody is getting ready for that day, because usually we have a line out of the door to buy chocolate. >> yeah. so let's talk about some of the treats that you brought, actually. this is -- this is great.

this is an actual game, right? >> yes. >> it's not just a box of chocolate, this is a game. >> this is a kids game. >> it's called the kissing game. >> and this is for adults and partners. and every time you pick up the chocolates, you're going to have -- you have to say "kiss me" and then you have to read the phrase that is under the chocolate. so it might say kiss me on the coffee table, kiss me on my neck. >> and then you've got the love pot. >> so the love pop has two names. two years ago i started to do the love pops. it was not that popular. so i decided to rename them spanker and write on the back "spank me." you know what? that was so successful. i don't know, that may be a joke on valentine. i mean lovers buy them. >> all you did is -- and this one says "i love you" on the back of it. >> this one says "spank me." >> and all of the sudden it became a big seller. >> yes.

so that tell us something about people. >> now this i love. tell me about this. >> this is called the love -- the lovers helper. the lover's helper is a play on chocolates. so we look at what aphrodisiac product according to the chinese, according to india, according to america, according to different countries. >> oh. >> so we need chocolate with different spices, with ginger, with different product. and the blue one represent america. >> now why is the blue one represent america, jacques? >> i understand that we have pill that is blue. we make a play on that tire, this is terrific. so we've got viagra. you've got a kissing game, a spanker. we've got a real trend here, jacques. [ laughter ] >> it's valentines! it's the day of the lovers. we have to do something about it. >> you're right. so how do you come up with the ideas in terms of different flavors and things?

>> trend, travel. that's the two things that i look at. so the trend is usually that for a lot of products we see better quality products in the markets. so i'm going after that share of the markets. i want to go premium. i want to go high cocoa contents, dark chocolates. this is the market i'm after. and traveling usually show you what is going on around the world, the flavor, the new flavor. maybe cocoa beans from different location. >> jacques, great to have you on the program. >> happy to be here. thank you very much. >> happy valentine's day. we appreciate you bringing so many treats. jacques torres joining us. for an extended look at jacques torres's chocolate factory, join us on our website at wsjr.cnbc.com. up next a look at the news this upcoming week that will have an impact on youmoney. and then the song ends for the lovers of a popular video game. the final heroic note when we come back. our field research team. and our product development staff. we know military lives are different. we've been there.

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so instead of making peanuts, your savings will be earning three times the national average. oops. sorry. three times more? i'll have that! it is now safe to go online to capitalone.com. what's in your wallet? buh-bye... call me. for more about my guests, check out my blog at investoragenda@cnbc.com. now a look at news ahead that may impact your money and move the markets. on tuesday the month of january will be released. and wednesday the latest meeting of the federal reserve's open market committee. also, the number of new residential units that began construction last month. the producer price index is also out on wednesday. that tracks inflation at the wholesale level. and then on thursday, the cpi will be out. the consumer price index looks at inflation on the price of consumer goods and services.

finally today, video game lovers will have to get by without a little help from their friends. activision blizzard announcing it will discontinue the ghiss tar hero franchise. after five years and more than two billion in revenue. the company is blaming poor sales of the guitar-shaped controllers as well as licensing fees for the music. so the show ends for living room rockers everywhere. that will do it for us today. thank you so much for joining me. my guest next week, former secretary of defense donald rumsfeld will be with me. keep it right here each week where wall street meets main street. see you next